Lufthansa looks to push back new Airbus, Boeing jets

The German-based airline colossus is in "intense" talks with Airbus and Boeing about postponing deliveries.

By Bloomberg News, May 6 2020
Lufthansa looks to push back new Airbus, Boeing jets

Lufthansa CEO Carsten Spohr says the airline is in "intense" talks with both Airbus and Boeing about postponing deliveries of a raft of new jets  – including the Airbus A320neo and A350-900, as well as Boeing's 787 Dreamliner and the delayed 777X.

Spohr is seeking to slash spending and rein in Lufthansa’s operations to survive a travel collapse that’s punctured a decades-long aviation boom. At the same time, he’s pursuing state support worth as much as 12 billion from Germany and the three other countries where the group has units.

“The future of Lufthansa is being decided in these days,” Spohr told shareholders at the German flag-carrier's annual general meeting, held online because of the pandemic. “It is about avoiding an insolvency with the help of the governments of our four home markets.”

Lufthansa executives said they couldn’t answer questions about negotiations for a government bailout, but that it’s in no-one’s best interests to see a collapse.

The crucial German bailout, which could total €10 billion, has been held up as Lufthansa resists ceding influence to the state, people with knowledge of the matter have said. Karl-Ludwig Kley, chairman of its supervisory board, told the AGM that questions regarding details of the talks wouldn’t be discussed.

Lufthansa Group CEO Carsten Spohr says a smaller airline lies ahead.
Lufthansa Group CEO Carsten Spohr says a smaller airline lies ahead.

The proposed rescue package foresees Germany taking a least a 25% stake in the airline and receiving at least one seat on the airline's supervisory board.

Talks with the German government are coming down to how much the state will profit from the rescue in future years, according to the people, who asked not to be named discussing private negotiations.

Lufthansa has already secured aid from Switzerland for its unit there in the form of 1.28 billion Swiss francs US($1.4 billion) in credit guarantees and is negotiating packages in Belgium and Austria, where it’s asking for €767 million in support from Vienna, mostly in repayable loans.

A different, smaller Lufthansa

As a group, Lufthansa holds 123 outstanding orders for Airbus planes, comprising 96 of the A320neo and 27 of the A350-900; and 40 for Boeing models, split evenly between the 777X and 787 Dreamliner.

However, Spohr forecasts "global demand will only find its new balance in 2023", by which time "Lufthansa will be a different and smaller Lufthansa after the crisis."

Spohr says the negotiations with Airbus and Boeing "with regard to postponing aircraft deliveries (are) because we will not be able to return to our old fleet size for an indefinite period."

Lufthansa has already announced plans to permanently reduce aircraft numbers and close discount arm Germanwings to resize for what it warns could be years of depressed demand.

Spohr added that Lufthansa is focused purely on its own situation and that there are no plans for a takeover of Alitalia, the Italian airline that filed for bankruptcy protection long before COVID-19 struck.

This article is published under license from Bloomberg Media: the original article can be viewed here

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